SEBI will revise exit loads in mutual funds soon.
In its board meeting held today, SEBI said that it has approved the proposal of Mutual Fund Advisory Committee (MFAC) to reduce the maximum permissible exit load in mutual funds.
Currently, many fund houses charge exit load of 1% in equity funds if redeemed within a year. However, a few schemes have been charging exit load in excess of 3% if redeemed within a year in credit funds. Currently, AMCs can charge up to 6% of exit load in mutual funds, said an AMC CEO.
Another key decision is segregation of assets and liability of MF schemes. SEBI said, “All assets and liabilities of each scheme shall be segregated and ring-fenced from other schemes of the mutual fund in addition to the existing requirement of segregating bank accounts and securities account.” This essentially means fund houses can no longer use pooled account to honour redemption request of investors.
Here are the other key highlights of the SEBI board meeting:
- New sponsors can obtain AMC license even if they do not meet profitability criteria. However, these sponsors will have to maintain a minimum net-worth of Rs.100 crore till the time the AMC becomes profitable for 5 consecutive years
- SEBI will issue uniform guidelines for calculating net-worth
- AMCs will not be required to issue unit certificates physically
- SEBI will reduce timeline for payment of dividend, permit other modes for payment of dividend and provide clarity with respect to payment of interest and interest in case of delay in dividend payment.
